It’s all about growth and jobs

The Russian Federation took over the G20 presidency on 1 December 2012, a time when all international organisations and countries had downgraded their growth forecasts for the year ahead. Against this background and the need for urgent and co-ordinated policy action to put the recovery back on track, we decided to refocus the G20 agenda on the issue of growth and jobs, and to work on very concrete actions and commitments for G20 leaders to discuss and possibly endorse at the Saint Petersburg summit in September 2013.

Building on previous achievements of the G20, we have hopefully made some progress towards achieving this objective during our presidency.

First of all, we emphasised the importance of kick-starting growth through quality jobs and investment, as mass unemployment and ongoing sluggish investment by corporations were (and still are) holding the recovery back.

Growth through boosting investmentIn this context we made measures to boost investment a key priority for the Russian G20 presidency. Indeed, while investment by corporations has been undoubtedly held back by gloomy growth prospects, lingering difficulties in accessing long-term financing, notably anaemic banking credit, have also played a role. We, therefore, considered the ways and means of redirecting the financial system as a whole towards the financing of the real economy–particularly financing for long-term and productive investment. We investigated options and solutions for restoring the traditional role of banks–to resume lending–and of equity markets. We also considered, in parallel, tapping and unleashing new and alternative sources of long-term financing, such as the growing pools of assets held by institutional investors–pension funds, sovereign wealth funds and insurers. The OECD made a key contribution in this domain by crafting “High-Level Principles of Long-Term Investment Financing by Institutional Investors”, which will be delivered together with a package of other policy measures to the G20 leaders at Saint Petersburg.

Growth through investing in job creationWe put jobs and employment centre stage during our presidency by thoroughly examining, carefully identifying and forcefully promoting possible ways for G20 countries to overcome record high unemployment. As an illustration of the magnitude of the current job crisis, some 67 million jobs would have to be generated to restore the previous employment-to-population ratio in all countries. With the support of international organisations, including the OECD, we reviewed progress by G20 members on their previous commitments in the realm of employment, we considered job creation through sound monetary and fiscal policies, and we examined options for labour activation of vulnerable groups. We identified and shared a broad range of actions, experiences and best practices that were discussed by labour and employment ministers in July in Moscow, with the aim of promoting more and better jobs, such as by encouraging pro-growth structural reforms in product and labour markets, ensuring better matching of skills with job opportunities, and enhancing employability through quality education and effective on-the-job and lifelong learning programmes. The OECD made an important contribution to this strand of work through its report “Activation Strategies for Stronger and More Inclusive Labour Markets in G20 Countries”, which gives examples of successful activation policies adapted to specific vulnerable groups in both advanced and emerging G20 countries.

Growth through open trade and investmentIn a context where policymakers have very few instruments left in their fiscal and monetary toolboxes, we were also convinced that an effective regulatory environment could provide a boost to growth. In particular, giving a new impetus to trade liberalisation would represent not only a powerful but also a free stimulus to world economic growth. Enhancing multilateral trade, as part of our second overarching objective of achieving growth through effective regulation, was therefore one of our key priorities. While unlocking the stalemate in the Doha Development Round of global trade talks was probably too ambitious and remote an objective for the G20, we wanted the group, under our presidency, to send a strong signal to the WTO Ministerial Conference (MC9) in Bali, Indonesia, in December 2013.

I believe we achieved some meaningful progress in this direction and I would like to thank the OECD and the WTO for the pivotal contribution they made to G20 discussions by building on their innovative and cutting-edge work on global value chains and trade in value-added. This work, by taking a fresh and evidence-based look at the way international trade is evolving and reshaping, and by emphasising that success in international markets depends as much on the capacity to import high-quality inputs as on the capacity to export, made the case for multilateral liberalisation even stronger.

Hence the importance of a comprehensive implementation of all trade facilitation measures currently being negotiated in the Doha Development Round–the so-called “low-hanging fruit”–that will be in the spotlight at Bali. Their implementation, the OECD reckoned, could reduce total trade costs by 10% in advanced economies and by up to 16% in developing ones.

A great deal of the market opening has been achieved in recent decades at the regional level. These regional trade agreements (RTAs) should be consistent with the multilateral system, and focus on trade creation activities. We have therefore emphasised that measures to enhance transparency regarding RTAs be also required to ensure a better understanding of their structure and features, and to help business anticipate and deal effectively with emerging changes.

The continued work of the OECD, together with WTO and UNCTAD, on tracking and monitoring new protectionist measures in the fields of investment and trade also constitutes a critical basis on which leaders will build in order to renew, as the presidency hopes and expects, their pledge to fight protectionism at the Saint Petersburg summit.

Growth through an effective, transparent framework, and an efficient and fair tax environmentA key objective of our presidency was to re-instil confidence and trust in the international economic system and to bolster growth through trust and transparency. Five years into the crisis and with a massive rise in unemployment and poverty, what most urgently needs to be restored is citizens’ trust in governments, policymakers and markets. For this to happen, we need in particular to fight corruption–a major obstacle to growth in the global economy–in an efficient and intransigent manner. We also need to address tax evasion and tax base erosion, and make sure that wealthy individuals and thriving multinationals pay their fair share of tax.

The Russian presidency has been actively implementing the first year of the 2013-14 Anti-Corruption Action Plan. Under the joint leadership of Russia and Canada, the Anti-Corruption Working Group (ACWG) established standards and tools to guide the countries’ progress on some of their key commitments. In particular, it adopted Guiding Principles on Enforcement of Foreign Bribery Offence, as well as on solicitation, and High-Level Principles on Mutual Legal Assistance. The OECD, thanks to its expertise and experience with monitoring the Anti-Bribery Convention and the integrity reviews, was instrumental in the elaboration of these three texts. Furthermore, the Russian presidency launched a reflection of the group on the nature and the future of the G20 anti-corruption agenda. At the presidency’s initiative, the group adopted a strategic framework which identifies directions for the ACWG in the mid-term, and drawing on an issues paper prepared by the OECD on corruption and growth, we examined the fundamental rationale for the G20’s engagement in this fight. Significant progress has also been registered during the Russian presidency in the area of international taxation. No need to underline the pivotal role played by the OECD in this domain! We have made great progress with the adoption of the G20/OECD “Action Plan on Base Erosion and Profit Shifting” aimed at tackling aggressive tax planning by, and double non-taxation of, multinational corporations. On the tax evasion front, significant progress has equally been made, with automatic exchange of tax information now being recognised by the G20 as the new global standard.

Growth and inclusive developmentIt was also important from a global growth perspective to extend G20 efforts aimed at supporting an acceleration of growth in developing countries. In accordance with G20 leaders’ request in Los Cabos, Mexico, we undertook a comprehensive and meticulous assessment of the nearcomplete implementation of the Seoul Multi-Year Action Plan on Development encapsulated in the G20 accountability report on development commitments. We also built the blocks of future G20 work on development by crafting and delivering the Saint Petersburg Development Outlook.

This is only a very rapid tour d’horizon of the multiple initiatives undertaken by the Russian Federation during its G20 presidency. But it provides a telling illustration of OECD’s multifaceted contribution to our work and efforts over the past year. I wish, on behalf of the Russian authorities, to thank OECD Secretary-General Angel Gurría, his Sherpa to the G20, Gabriela Ramos, and the OECD staff involved in G20 matters for their invaluable support.

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